FCCC/CP/2021/12/Add.1
14
Decision 5/CP.26
Matters relating to the Standing Committee on Finance
The Conference of the Parties,
Recalling Articles 4 and 11 of the Convention,
Also recalling decisions 12/CP.2, 12/CP.3, 1/CP.16, paragraph 112, and 2/CP.17,
paragraphs 120–121, 5/CP.18, 5/CP.19, 7/CP.19, 6/CP.20, 6/CP.21, 8/CP.22, 7/CP.23,
8/CP.23, 4/CP.24, 11/CP.25 and 5/CMA.2,
Taking note of decision 10/CMA.3,
1. Welcomes the 2020 and 2021 reports of the Standing Committee on Finance;
1
I. Fourth (2020) Biennial Assessment and Overview of Climate
Finance Flows
2. Welcomes the fourth (2020) Biennial Assessment and Overview of Climate Finance
Flows of the Standing Committee on Finance,
2
in particular the summary,
3
and endorses its
key findings, as contained in annex I;
3. Notes that global climate finance flows were 16 per cent higher in 2017–2018 than in
2015–2016, reaching an annual average of USD 775 billion; the 2017–2018 annual average
of public financial support reported by Parties included in Annex II to the Convention in their
biennial reports
4
(USD 48.7 billion) represents an increase of 2.7 per cent from the annual
average reported for 2015–2016; the annual average of climate finance from multilateral
development banks’ own resources to developing countries and emerging economies
(USD 36.6 billion) represents a 50 per cent increase since 2015–2016; and UNFCCC funds
and multilateral climate funds approved USD 2.2 billion and USD 3.1 billion for climate
finance projects in 2017 and 2018, respectively;
4. Welcomes the improved granularity of data in the fourth (2020) Biennial Assessment
and Overview of Climate Finance Flows and encourages developed country Parties and
climate finance providers, as well as multilateral and financial institutions, private finance
providers and other relevant institutions, to continue to enhance the availability of granular,
country-level data on mitigation and adaptation finance;
5. Calls upon developed country Parties and other climate finance providers to continue
to enhance the harmonization of methodologies for tracking and reporting climate finance
provided and mobilized;
6. Recognizes the fact that there is no multilaterally agreed definition of climate finance,
notes the submissions received in response to decisions 11/CP.25 and 5/CMA.2, which
highlighted that some Parties noted how the lack of a common definition impacts the ability
to track and assess climate finance, while other Parties mentioned that a single definition
would not be useful, and also notes that the operational definitions in use generally reflect a
common understanding of what is considered mitigation and adaptation finance;
7. Requests the Standing Committee on Finance to continue its work on definitions of
climate finance, taking into account the submissions received from Parties on this matter,
with a view to providing input for consideration by the Conference of the Parties at its twenty-
seventh session (November 2022);
1
FCCC/CP/2020/4−FCCC/PA/CMA/2020/3 and FCCC/CP/2021/10–FCCC/PA/CMA/2021/7.
2
Standing Committee on Finance. 2021. Fourth (2020) Biennial Assessment and Overview of Climate
Finance Flows. Bonn: UNFCCC. Available at
https://unfccc.int/sites/default/files/resource/54307_1
%20-%20UNFCCC%20BA%202020%20-%20Report%20-%20V4.pdf.
3
FCCC/CP/2021/10/Add.1–FCCC/PA/CMA/2021/7/Add.1.
4
Reports submitted as at October 2020.
FCCC/CP/2021/12/Add.1
15
8. Invites the operating entities of the Financial Mechanism and other institutions
providing climate finance to consider the operational definitions of climate finance of the
Standing Committee on Finance with a view to ensuring that finance provided addresses the
needs of developing country Parties, while respecting their existing policies;
9. Welcomes the mapping of the information relevant to Article 2, paragraph 1(c), of the
Paris Agreement in the fourth (2020) Biennial Assessment and Overview of Climate Finance
Flows and takes note of the key findings of the report, including that banks representing over
USD 37 trillion in assets and institutional investors with USD 6.6 trillion in assets have
pledged to align their lending and investments with net zero emissions by 2050;
10. Encourages Parties to ensure that just transition financing is incorporated into
approaches to align climate action with the goals of the Paris Agreement;
II. First report on the determination of the needs of developing
country Parties related to implementing the Convention and
the Paris Agreement
11. Welcomes the first report on the determination of the needs of developing country
Parties related to implementing the Convention and the Paris Agreement
5
of the Standing
Committee on Finance, in particular the executive summary,
6
and endorses its key findings
and recommendations, as contained in annex II;
12. Notes that nationally determined contributions from 153 Parties included 4,274 needs,
with 1,782 costed needs identified across 78 nationally determined contributions,
cumulatively amounting to USD 5.8–5.9 trillion up until 2030, and that, although developing
country Parties identified more adaptation needs than mitigation needs, more costs were
identified for the latter, which may not imply that mitigation needs are greater but rather that
there is a lack of available data, tools and capacity for assessing adaptation needs;
13. Also notes that the first report on the determination of the needs of developing country
Parties related to implementing the Convention and the Paris Agreement is the first of its
kind, with important areas that will need to be further developed;
14. Further notes that the first report on the determination of the needs of developing
country Parties related to implementing the Convention and the Paris Agreement does not
fully cover the needs and costs of developing countries and all regions as a result of limited
availability of information and acknowledges that financial and technical support will
enhance developing countries’ abilities to update the reporting of qualitative and quantitative
information and data on their needs;
15. Expresses its concern that the first report on the determination of the needs of
developing country Parties related to implementing the Convention and the Paris Agreement
does not have disaggregated data for small island developing States;
16. Emphasizes that there is a particular challenge in deriving cost estimates for climate
adaptation and enhancing resilience needs and, in this context, deriving cost estimates for
averting, minimizing and addressing loss and damage needs;
17. Encourages developing country Parties to consider the insights into methodologies
identified in the first report on the determination of the needs of developing country Parties
related to implementing the Convention and the Paris Agreement when costing and
determining needs;
18. Invites the operating entities of the Financial Mechanism, United Nations agencies,
multilateral and bilateral financial institutions, and other relevant institutions to make use of
5
Standing Committee on Finance. 2021. First report on the determination of the needs of developing
country Parties related to implementing the Convention and the Paris Agreement. Bonn: UNFCCC.
Available at https://unfccc.int/topics/climate-finance/workstreams/determination-of-the-needs-of-
developing-country-parties/first-report-on-the-determination-of-the-needs-of-developing-country-
parties-related-to-implementing.
6
FCCC/CP/2021/10/Add.2–FCCC/PA/CMA/2021/7/Add.2.
FCCC/CP/2021/12/Add.1
16
the information contained in the first report on the determination of the needs of developing
country Parties related to implementing the Convention and the Paris Agreement when
supporting developing country Parties in identifying and costing needs;
19. Requests the Standing Committee on Finance, in preparing future reports on the
determination of the needs of developing country Parties related to implementing the
Convention and the Paris Agreement, to continue to reach out to developing country Parties
and relevant developing country stakeholders when generating data and information on
needs;
III. Report of the Standing Committee on Finance
20. Expresses its appreciation to the Governments of Belgium, Japan and Norway and to
the European Commission for their financial contributions to support the work of the
Standing Committee on Finance;
21. Endorses the workplan of the Standing Committee on Finance for 2022
7
and
underlines the importance of the Standing Committee on Finance focusing its work in 2022
in accordance with its current mandates;
22. Endorses the outline of the technical report of the fifth Biennial Assessment and
Overview of Climate Finance Flows of the Standing Committee on Finance and underscores
that this report will continue to contribute to assessing the achievement of the goal of
mobilizing jointly USD 100 billion per year by 2020 in the context of meaningful mitigation
action and transparency on implementation, in accordance with decision 1/CP.16;
8
23. Notes the high-level summary report of the first part of the 2021 Forum of the
Standing Committee on Finance on finance for nature-based solutions carried out in a hybrid
format on 15 and 16 October 2021 and requests the Standing Committee on Finance to
organize the second part of the Forum in 2022, subject to health and safety considerations
arising from the coronavirus disease 2019 pandemic;
24. Notes that the Standing Committee on Finance was not able to produce draft guidance
to the operating entities of the Financial Mechanism and that it has not agreed on
recommendations from the fourth (2020) Biennial Assessment and Overview of Climate
Finance Flows, and in this regard requests the Committee to improve its working modalities;
25. Notes with appreciation the efforts of the Standing Committee on Finance in
enhancing engagement with stakeholders in the context of its workplan;
26. Encourages the Standing Committee on Finance to continue to enhance its efforts
towards ensuring gender-responsiveness in implementing its workplan;
27. Requests the Standing Committee on Finance to report to the Conference of the Parties
at its twenty-seventh session on its progress in implementing its 2022 workplan;
28. Also requests the Standing Committee on Finance to consider the guidance provided
to it in other relevant decisions of the Conference of the Parties.
7
FCCC/CP/2021/10–FCCC/PA/CMA/2021/7, annex II.
8
FCCC/CP/2021/10/Add.5–FCCC/PA/CMA/2021/7/Add.5.
FCCC/CP/2021/12/Add.1
17
Annex I*
Summary by the Standing Committee on Finance of the
fourth (2020) Biennial Assessment and Overview of Climate
Finance Flows
[English only]
I. Context and mandates
1. The SCF assists the COP in exercising its functions with respect to the Financial
Mechanism of the Convention, including in terms of measurement, reporting and verification
of support provided to developing country Parties, through activities such as the BA. The
SCF also serves the Paris Agreement in line with its functions and responsibilities established
under the COP, including the BA.
1
2. Since the first BA in 2014, the preparation of subsequent BAs has been guided by
mandates from the COP and the CMA to the SCF.
2
3. The fourth (2020) BA presents an updated overview and trends in climate
finance flows up until 2018 and assesses their implications for international efforts to
address climate change. The fourth BA includes an overview of climate finance flows from
developed to developing countries,
3
and available information on domestic climate finance,
cooperation among developing countries and other climate-related flows that constitute
global climate finance. It assesses the key features of climate finance flows, including their
composition and purposes, and explores insights into their effectiveness, access to finance,
country ownership, and alignment with the needs and priorities of beneficiaries, as well as
their magnitude in the context of broader flows. In addition, it provides information on recent
developments on methodological issues related to the tracking of climate finance at the
international and domestic level, operational definitions of climate finance in use and new
indicators for measuring the impact of climate finance.
4. The fourth (2020) BA includes mapping of information relevant to the long-term
goal outlined in Article 2, paragraph 1(c), of the Paris Agreement on making finance
flows consistent with a pathway towards low GHG emission and climate-resilient
development. The fourth BA provides the first mapping exercise, to be conducted every four
years, to identify the latest actions and activities of different actors related to making finance
flows consistent with low GHG emission and climate-resilient development pathways,
including national Governments, development finance institutions, central banks and
regulators, multilateral finance institutions, and climate funds, as well as private sector actors
such as corporations, banks and investors. Information produced by United Nations entities
and initiatives, and under other multilateral processes, as well as the perspective of civil
society organizations and the academic community, was also explored. Emerging
methodologies, indicators and data sets to support tracking the consistency of finance flows
are also discussed in respective chapters of the technical report (see para. 5 below).
5. The fourth BA comprises this summary, prepared by the SCF, and a technical report,
prepared by experts under the guidance of the SCF drawing on information and data from a
* For a list of acronyms and abbreviations, see document
FCCC/CP/2021/10/Add.1−FCCC/PA/CMA/2021/7/Add.1.
1
Decisions 2/CP.17, para. 121(f); and 1/CP.21, para. 63.
2
Decisions 1/CP.18, para. 71; 5/CP.18, para. 11; 3/CP.19, para. 11; 8/CP.22, annex, para. 37(f);
4/CP.24, paras. 4, 5, and 10; and 19/CMA.1, para. 36(d).
3
For the purpose of the overview of climate finance in the BA, various data sources are used to
illustrate flows from developed to developing countries, without prejudice to the meaning of those
terms in the context of the Convention and the Paris Agreement, including but not limited to
Annex II/Annex I Parties, non-Annex I Parties and MDBs; OECD members and non-OECD
members; OECD DAC members and countries eligible for OECD DAC official development
assistance; and other relevant classifications.
FCCC/CP/2021/12/Add.1
18
range of sources. It was subject to extensive stakeholder input and expert review, but remains
a product of the external experts.
II. Challenges and limitations
6. The fourth BA provides an updated overview of climate finance flows in 2017–2018,
along with data on trends in 2011–2016 compiled from previous BA reports where
applicable. Due diligence has been undertaken to use the best information available from the
most credible sources. In compiling estimates, efforts have been made to ensure that they are
based on activities in line with the convergence of operational definitions of climate finance
identified in the first BA and to avoid double counting by focusing on primary finance, which
is finance for a new physical item or activity. Challenges were nevertheless encountered in
collecting, aggregating and analysing information from diverse sources.
7. Data uncertainty: Most of the uncertainties associated with each source of data
which have different underlying causes identified in the previous BAs persist, although there
have been some improvements. Uncertainties relating to the data on domestic public
investments result from the lack of geographical coverage and differences in the way tracking
methods are applied, as well as significant changes in the methods used for estimating
investment in energy efficiency and sustainable transport over time. Uncertainties also arise
from the lack of transparency of data for determining private climate finance; the methods
used for estimating adaptation finance; differences in the assumptions used in underlying
formulas for attributing finance from MDBs to developed countries; the classification of
sustainable or green finance; and the incomplete data on non-concessional finance flows.
8. Data gaps: Significant gaps in the coverage of sectors and sources of climate finance
remain, particularly with regard to private investment, and adaptation and resilience. While
estimates of incremental investment in energy efficiency have improved, understanding of
the public and private sources of finance and the financial instruments used remains
inadequate. For data on sustainable transport, efforts have been made to improve coverage
of public and private investment in electric vehicles and charging infrastructure. However,
high-quality data on private investments in sustainable agriculture, forestry and land use,
water, waste, and adaptation and resilience are particularly lacking. Specifically, adaptation
finance estimates, which are context-specific and incremental, are difficult to compare with
mitigation finance estimates, and more work is needed on estimating climate-resilient
investments.
9. In relation to mapping information relevant to Article 2, paragraph 1(c), of the Paris
Agreement, the lack of a common interpretation of or guidelines on what information
qualifies as relevant presents a challenge in adequately capturing the scope and depth of
related action. For the fourth BA an actor-specific mapping approach was adopted, as
opposed to focusing on particular financial instruments, asset classes, or categories of action,
in order to capture what financial sector actors consider to be relevant information on
activities to be consistent with or align with the goals of the Paris Agreement. Such mapping
may be non-exhaustive and limited in terms of representation across geographic areas and
sectors. It may also obscure the role of actors that work across multiple categories. Given
that a significant amount of information considered relevant is to be derived from multiple-
member initiatives and coalitions, due to potential benefits of network effects, focusing on
these groups may limit the mapping of information from individual cases that may be
considered best practice or leading examples. Furthermore, there is a limited track record and
limited in-depth information related to implementing activities consistent with or that align
with the Paris Agreement that might enable a thorough assessment of their effectiveness, and
therefore their relevance, in achieving the goal outlined in Article 2, paragraph 1(c).
10. The limitations outlined above need to be taken into consideration when deriving
conclusions and policy implications from the fourth BA. The SCF will continue to contribute,
through its activities, to the progressive improvement of the measurement, reporting and
verification of climate finance in future BAs, to help address these challenges.
FCCC/CP/2021/12/Add.1
19
III. Key findings
A. Methodological issues related to transparency of climate finance
11. Improvements in the consistency of reporting on climate finance under the
Convention are observed. Progress regarding the consistency of climate finance reporting
was observed in the BR4 common tabular format submissions from Annex II Parties and the
provision of qualitative information in the documentation boxes of those tables or in the BRs.
One improvement relates to the reporting by type of support, with Parties reporting only on
mitigation, adaptation and cross-cutting categories, without including other types of support.
Nevertheless, improvements in aggregating geographic or sector-based information remains
limited owing to differences in the approaches used by Parties and the functionality of the
reporting system to allow differences in reporting. Several Parties referred to ongoing work
to resolve challenges related to reporting on private finance mobilized by public
interventions.
12. Data coverage and granularity of reporting on climate finance received in the BURs
of non-Annex I Parties has improved since the previous BA. Nineteen Parties have submitted
a BUR for the first time since the previous BA, in addition to a further 27 Parties submitting
second or third BURs. The proportion of BURs that include information on finance received
rose from approximately 60 per cent in 2014 to over 90 per cent in 2019–2020. A total of 41
Parties have provided quantitative information on climate finance received at the project or
activity level in tabular format. Many differences remain in the approaches Parties used for
reporting, including time periods of reported data and information on types of support, sectors
and financial instruments. Several Parties included additional information in their second and
third BURs on whether a project is linked to capacity-building, technology development and
transfer, or technical assistance.
13. Availability of domestic public climate finance data is increasing, with more
countries establishing climate budget tagging systems. Notable improvements were
observed in the tracking of domestic climate-related public or private finance flows, with the
issuance of green sovereign bonds incentivizing the establishment of regular tracking systems
in both developed and developing countries, building on previous work through CPEIRs.
Thirteen countries have established tracking systems for national budgets, with a further five
countries developing tracking methodologies. In total, estimates of domestic public
expenditures on climate change in 2017–2018 amount to approximately USD 86.6 billion
(see chap. III.B below).
14. Operational definitions of climate finance in use generally reflect a common
understanding of what is considered mitigation or adaptation finance, but differ on the
details of sector-specific activities, certain financial instruments and approaches to
public and private finance flows. Operational definitions of climate finance in use have
evolved over time. The MDB list of activities eligible for classification as mitigation finance
includes charging stations for electric vehicles and hydrogen or biofuel fuelling since 2017
and resource efficiency in aquaculture since 2018, while OECD DAC integrated adjustments
to adaptation finance eligibility criteria in 2016 to harmonize with a stepwise approach
developed by MDBs.
15. The lists of climate mitigation activities developed by MDBs have served in part to
inform green or climate-aligned taxonomies in recent years to support the development of
the green bond market and/or regulatory efforts in the field of sustainable finance to combat
greenwashing and promote the standardization of financial products. Approaches to defining
mitigation and adaptation activities are broadly consistent across various international
organizations and regulatory initiatives, although inclusion and exclusion lists and
approaches to the criteria used to define such activities can vary.
16. Parties’ submissions on operational definitions of climate finance in use highlighted
a range of views on the need for, and on the form and scope of, a common definition of
climate finance. Some Parties noted that a single definition would not be useful, or should be
broad enough to cater for the dynamic and evolving nature of climate finance due to a variety
of factors, including NDCs and implementation of the enhanced transparency framework
FCCC/CP/2021/12/Add.1
20
over time, ways of tracking progress related to Article 2, paragraph 1(c), of the Paris
Agreement, and changes in methodologies and definitions for mitigation and adaptation due
to data availability or improvements in processes and knowledge.
17. Some Parties pointed to the use of a classification system or taxonomy rather than a
single definition and referred to the development of taxonomies or classifications outside the
UNFCCC process or within national sustainable finance frameworks.
18. Other Parties noted how the lack of a common definition affects the ability to track
and assess the fulfilment of the obligations of Annex II Parties under the Convention and
those of developed country Parties under the Paris Agreement. A common definition could
support the preparation of the BA and the overall transparency and effectiveness of the
UNFCCC process by highlighting the link between the level of action of developing countries
and the level of support provided and, ultimately, the achievement of the objectives of the
Convention and the Paris Agreement. In this context, two submissions included a proposal
for an operational definition of climate finance, while other submissions included a proposal
for an operational approach to achieving greater convergence among definitions over time,
based either on common principles or responses to a common set of questions to provide
granular information.
19. More methodologies on measuring outcomes of financing for climate resilience
have emerged in recent years. Many multilateral institutions are in the process of
developing or have already developed frameworks for measuring impacts, with an increasing
focus on adaptation and resilience, such as the Resilience Rating System by the World Bank
Group and the Climate Resilience Metrics Framework by MDBs and IDFC. Although
approaches to measuring impacts of climate finance vary, most multilateral institutions, as
well as bilateral contributors, use a similar set of mitigation and adaptation indicators.
20. There are four common decision points identified in emerging methodologies and
metrics in use for tracking consistency with low GHG emission and climate-resilient
development pathways. As with tracking climate finance, emerging methodologies relevant
to tracking consistency with the long-term goal under Article 2, paragraph 1(c), of the Paris
Agreement also need to overcome issues related to definitions, the scope or boundary of
tracking, data availability and comparability.
21. Methods differ as to the type of finance flows, stocks and services tracked (primary
or secondary markets) and the ways of measuring consistency (e.g. on the basis of GHG
emissions, emissions intensity metrics or technology choices). However, the four common
decision points are:
(a) Identifying a given pathway to low GHG emission and climate-resilient
development against which the consistency of actions will be measured. Different pathways
may be chosen relative to their consistency with low GHG emission development and
mitigation goals, and to their consistency with climate-resilient development and adaptation
or resilience goals. Pathways may result in compatible activity lists or performance metrics
against which to measure action. In addition, the timescale used to measure consistency is
important. This could be, for example, within 5 or 10 years, or by a given year, such as 2050;
(b) Reviewing the activities and actions to be tracked (e.g. investments, economic
activities such as production and sales or purchasing of goods and services, policymaking,
legislation and voluntary standards) that the stakeholder undertakes, which is relevant to
whether the pathway will be achieved;
(c) Understanding which finance flows that go towards realizing the activities and
actions should be tracked by the stakeholder;
(d) Identifying which key metrics to use to assess whether finance flows and
related processes result in activities and actions that are consistent with the given pathway
identified during the review.
FCCC/CP/2021/12/Add.1
21
B. Overview of climate finance flows in 2017–2018
22. Global climate finance flows were 16 per cent higher in 2017–2018 than in 2015–
2016, reaching an annual average of USD 775 billion and achieving significantly higher
results, particularly in renewable energies. High-bound climate finance estimates
increased from USD 692 billion in 2016 to USD 804 billion in 2017 and USD 746 billion in
2018, for an annual average of USD 775 billion in 2017–2018. The growth in 2017 was
driven largely by an increase in new private investment in renewable energy as a result of
decreasing technology costs, while the decline in 2018 was due primarily to a slowdown in
wind and solar investment in major markets. Figure 1 provides a breakdown of global climate
finance flows in 2015–2018 by sector, and figure 2 provides an overview of global climate
finance and finance flows in 2017–2018 from developed to developing countries.
Figure 1
Global climate finance flows in 2015–2018
(Billions of United States dollars)
23. Continued decreases in renewable energy technology costs mean new investment
goes further. Renewable energy technology costs continued to decline in 2017–2018
compared with those in 2015–2016, with a 29 per cent decrease for solar photovoltaics, an
18 per cent decrease for offshore wind and a 10 per cent decrease for onshore wind,
emphasizing how greater impacts are achieved for each new dollar of investment. In 2018,
100 per cent more renewable energy capacity was commissioned than in 2012 with only a 22
per cent increase in investment.
24. For the fourth BA, several new data sources have been used to track climate finance
in areas that were not previously included, such as electric vehicle charging infrastructure,
transport, water, waste and municipal investments. Where possible, the data have been
integrated in the time series retroactively to allow for trend comparisons.
25. Climate finance from developed to developing countries increased through
various channels. Total public financial support reported by Annex II Parties in their BRs
submitted (as at October 2020) amounted to USD 45.4 billion in 2017 and USD 51.8 billion
in 2018. The annual average (USD 48.7 billion) represents an increase of 2.7 per cent from
the annual average reported for 2015–2016. Climate-specific financial support, which
accounts for up to three fourths of the financial support reported in the BRs, increased by 13
per cent on a comparable basis to an annual average of USD 36.3 billion. Most climate-
specific financial support was reported through bilateral, regional and other channels, with
USD 28.1 billion in 2017 and USD 31.8 billion in 2018.
26. Mitigation finance constitutes the largest share of climate-specific financial support
through bilateral channels at 64 per cent. However, the share of adaptation finance increased
from 15 per cent in 2015–2016 to 21 per cent in 2017–2018 as it grew at a higher rate than
mitigation finance.
27. UNFCCC funds and multilateral climate funds approved USD 2.2 billion and USD
3.1 billion for climate finance projects in 2017 and 2018, respectively. The annual average
for 2017–2018 (USD 2.7 billion) represents an increase of approximately 39 per cent
compared with those in 2015–2016, owing primarily to increases in project approvals by the
FCCC/CP/2021/12/Add.1
22
GCF Board and the GEF Council. In terms of inflows to the operating entities of the Financial
Mechanism, the seventh replenishment of the GEF resulted in USD 4.1 billion in pledges and
USD 802 million allocated to the climate change focal area, compared with USD 4.4 billion
in total pledges and USD 1.26 billion allocated to the climate change focal area in the sixth
replenishment. The first replenishment of the GCF pledging conference in 2019 amounted to
USD 9.8 billion, compared with USD 10.2 billion from the initial resource mobilization
pledging conference in 2014.
FCCC/CP/2021/12/Add.1
23
Figure 2
Climate finance flows in 2017–2018
(Billions of United States dollars, annualized)
Notes: (1) Value discounts transport energy efficiency estimates by 8.5 per cent to account for overlap with electric vehicle
estimates, same as in previous years. (2) From Annex II to non-Annex I Parties. Values derived from calculating attributed shares of
Annex II Parties per MDB multiplied by the climate finance provided to non-Annex I Parties from MDBs’ own resources.
(3) Estimates include private finance mobilized through public interventions from developed countries.
28. MDBs provided USD 34 billion and USD 42 billion in climate finance from their own
resources to developing and emerging economies in 2017 and 2018, respectively. The annual
FCCC/CP/2021/12/Add.1
24
average (USD 36.6 billion) represents a 50 per cent increase since 2015–2016. The attribution
of these flows to developed countries is calculated at between USD 23.3 billion to USD 24.1
billion in 2017 and USD 25.8 billion to 28.0 billion in 2018.
29. The uncertainty of the data on the geographic sources and destinations of private
finance flows to developing countries remains significant. OECD estimates that private
climate finance mobilized by developed countries through bilateral and multilateral channels
amounted to USD 14.5 billion in 2017 and USD 14.6 billion in 2018.
30. Information on the recipients of climate finance remains limited. The increase in BUR
submissions from non-Annex I Parties has resulted in a greater amount of information on
finance received than for previous BAs. However, time lags in data availability for reporting
make it difficult to provide updated or complete information on finance received in 2017–
2018. Of the 63 Parties that had submitted BURs as at December 2020, 28 included some
information on climate finance received in 2017 or 2018. In total, USD 7.8 billion was
reported as received for projects starting in 2017 and USD 2 billion for projects starting in
2018. A total of 23 Annex II Parties included information on recipients of finance at either
the country or project level in their BR4s.
31. South–South climate finance flows have increased, but data availability and
coverage remain limited. While data availability and coverage of climate finance flows
between developing countries remain limited, it is a growing area of global climate finance
flows. Several countries voluntarily report to standardized reporting systems such as OECD
DAC. Up to 20 development finance institutions that are IDFC members are based in non-
OECD countries, and MDBs led by developing countries such as the Asian Infrastructure
Development Bank and the New Development Bank continue to increase finance flows.
Estimates of South–South climate finance flows amounted to USD 17.8 billion to USD 18.0
billion in 2017 and USD 18.0 billion to USD 18.2 billion in 2018.
C. Assessment of climate finance flows
32. Trends in public concessional climate finance, including bilateral flows, multilateral
climate funds and funds from MDBs, point to increasing flows towards developing countries
from multilateral sources, while bilateral climate finance flows have stagnated.
33. Support for mitigation remains greater than support for adaptation. Adaptation
finance has remained at between 20 and 25 per cent of committed concessional finance across
all sources (noting measurement differences), showing little movement since the previous
BA (see the table below). However, the continued rise in public climate finance flows
contributing towards both adaptation and mitigation complicates this assessment. The rise is
most obvious in flows from multilateral climate funds and through bilateral channels. While
the GCF allocates climate finance for projects in this cross-cutting category to adaptation or
mitigation, not all institutions do so in their programming or reporting. This makes it more
difficult to track progress in scaling up adaptation finance and ultimately achieving balance
between finance for adaptation and mitigation objectives.
34. Grants continue to be a key instrument for adaptation finance. In 2017–2018
grants accounted for 64 and 94 per cent of the face value of bilateral adaptation finance
reported to OECD and of adaptation finance from multilateral climate funds, respectively
(see the table below). During the same period, 9 per cent of adaptation finance flowing
through MDBs was grant-based. These figures indicate no change since 2015–2016.
Mitigation finance remains less concessional in nature, with 30 per cent of bilateral flows, 29
per cent of multilateral climate fund approvals and 3 per cent of MDB investments taking the
form of grants. These figures, however, may not fully capture the added value brought by
combining different types of financial instruments, or technical assistance with capital flows,
which can often lead to greater innovation or more sustainable implementation.
FCCC/CP/2021/12/Add.1
25
Characteristics of international public climate finance flows in 2017–2018
Annual
average
(USD
billion)
Area of support
Financial instrument
Adaptation Mitigation REDD+
a
Cross-
cutting
Grants
Concession
al loans Other
Multilateral
climate funds
b
2.7 20% 48% 5% 27%
53% 40% 8%
Bilateral
climate finance
c
29.9 21% 65% – 15%
64% 36% <1%
MDB climate
finance
d
39.2 25% 75% – –
5% 75% 20%
Note: All values based on approvals and commitments.
a
In decision 1/CP.16, para. 70, the Conference of the Parties encouraged developing country Parties to contribute
to mitigation actions in the forest sector by undertaking the following activities: reducing emissions from
deforestation; reducing emissions from forest degradation; conservation of forest carbon stocks; sustainable
management of forests; and enhancement of forest carbon stocks.
b
Including: Adaptation for Smallholder Agriculture Programme, Adaptation Fund, Bio Carbon Fund, Clean
Technology Fund, Forest Carbon Partnership Facility, Forest Investment Program, Global Climate Change Alliance,
GCF, GEF Trust Fund, Least Developed Countries Fund, Partnership for Market Readiness, Pilot Programme for
Climate Resilience, Scaling Up Renewable Energy Program, Special Climate Change Fund and United Nations
Collaborative Programme on Reducing Emissions from Deforestation and Forest Degradation in Developing
Countries.
c
Bilateral climate finance data are sourced from Annex II Parties’ BRs (that further include regional and other
channels) for the annual average and thematic split. The financial instrument data are taken from data from OECD
DAC, referring only to concessional flows of climate-related development assistance reported by OECD DAC
members. In section C of the summary and chap. III of the technical report, “bilateral finance” refers only to
concessional flows of climate-related development assistance reported by OECD DAC members.
d
The annual average and thematic split of MDBs includes their own resources only, while the financial instrument
data include data from MDBs and from external resources, owing to the lack of data disaggregation.
35. With regard to the geographic distribution of public concessional climate finance,
Asia remains the principal beneficiary region. In 2017–2018 the region received on average
30 per cent of funding commitments from bilateral flows, multilateral climate funds and
MDBs. Sub-Saharan Africa received an average of 24 per cent of commitments across the
sources in the same period, followed by Latin America and the Caribbean with 17 per cent
and the remainder going to the Middle East and North Africa; Central, Eastern and South-
Eastern Europe; the South Caucasus; and Central Asia.
36. The LDCs and SIDS are particularly vulnerable to the adverse effects of climate
change. Article 9 of the Paris Agreement emphasizes the importance of the provision of
scaled-up financial resources to these countries. In 2017–2018 funding committed to projects
in the LDCs represented 22 per cent of bilateral flows and 24 per cent of finance approved
through multilateral climate funds. Funding committed to SIDS represented 2 per cent of
bilateral finance and 10 per cent of finance approved through multilateral climate funds. Of
the finance provided to the LDCs and SIDS, the amount targeting adaptation fell slightly in
2017–2018, although the shares remained stable overall. MDBs channelled 11 per cent of
their climate finance to the LDCs and 3 per cent to SIDS. As in previous years, adaptation
finance as a share of all climate finance to these countries was significantly higher than that
of the overall climate finance spending by MDBs.
37. In 2017–2018, there continued to be a push to diversify modalities of access to
climate finance. In a 2019 survey of 105 respondents from 45 developing countries, 73 per
cent identified finance from multilateral climate funds as the most challenging source of
finance to access compared with private finance (62 per cent), MDBs and development
finance institutions (30 per cent) and bilateral sources (17 per cent). Institutions in developing
countries are increasingly able to meet fiduciary and environmental and social safeguards
requirements for accessing funds. Data show a continued increase in the number of national
implementing entities of multilateral climate funds as well as an increase in the accreditation
of civil society and private entities, with both trends largely driven by the GCF. Significant
shares of climate finance approvals from multilateral climate funds are programmed through
multilateral accredited and implementing entities.
FCCC/CP/2021/12/Add.1
26
38. The management of climate finance, as well as the development and implementation
of projects that it supports, necessarily entails costs. Often recovered through mechanisms
such as administrative budgets and implementing agency fees, the degree of such costs varies
across institutions by nature of their different approaches and delivery models. In 2017–2018,
major multilateral climate funds spent USD 217 million on administration costs, while
implementing entity fees amounted to USD 231 million. In general, the administration costs
of climate finance management have tended to decrease over time. The alignment of
administrative functions between funds (e.g. the GEF administration of the Least Developed
Countries Fund and the Special Climate Change Fund) can streamline management and
disbursement mechanisms. This is essential in order to retain the trust that contributors and
beneficiaries place in the funds. However, it must be balanced by the above-mentioned rise
in implementing entities and associated costs.
39. The capacity of institutions to make strategic choices to use climate finance has long
been recognized as important. Both the Adaptation Fund and the GCF have developed
readiness programmes, supporting countries to plan for, access and deliver climate finance.
Together these funds have approved over USD 285 million in readiness support. The GEF
has instead incorporated capacity-building objectives into existing project funding through
“enabling activities”. Reviews of these programmes have endorsed the use of readiness
support to build all aspects of the capacity required to mobilize finance for climate action,
rather than a focus on supporting access to multilateral climate funds.
40. Ownership over the end use of climate finance flows remains a critical factor in
its effectiveness. The broad concept of ownership encompasses the consistency of climate
finance with national priorities, the degree to which national systems are used for both
spending and tracking, and the engagement of a wide range of stakeholders. Financial needs
are being increasingly articulated, but to date lack sufficient comparability of methods,
including for costs, time frames and assumptions, in order to make an accurate assessment of
the alignment of climate finance provision with such needs. Ministries of finance and
planning are strengthening their commitments to engage in climate change planning, with
national-level institutions playing a greater role through domestic tracking, monitoring and
verification of climate finance.
41. Impact reporting systems and practices for climate finance are maturing.
Mechanisms for monitoring the impact of climate finance may be relevant for the
implementation of the enhanced transparency framework. While the reporting of results is
slowly improving under multilateral climate funds, MDBs do not include information on
mitigation and adaptation outcomes in their joint reports and bilateral contributors have
varied approaches to reporting on impacts. Emission reduction remains the primary impact
metric for climate change mitigation, while adaptation impact continues to be measured
primarily in terms of the number and type of people that benefit from projects. It remains
difficult to accurately assess the quality of the impacts (i.e. outcomes) achieved, given that
they are being presented in a multitude of formats and over varying timescales and are hard
to verify.
42. A number of decisions have strengthened the way in which gender issues are
addressed in the UNFCCC process. Gender-responsive public finance is likely to be more
effective and efficient. Multilateral climate funds have been front runners in mainstreaming
gender considerations in governance and operations. Those under the Financial Mechanism
now have a mandate to include information on gender considerations in their annual reports
to the COP. While advances are being made, there is scarce information on gender-responsive
budgeting, suggesting that work remains to be done in integrating gender considerations on
the ground.
43. The drivers of climate finance flows can consist of both demand- and supply-side
actions but may differ in terms of mitigation or adaptation objectives. For mitigation
finance, policy targets and support mechanisms have played a major role in driving climate
finance flows, such as in the role of long-term fixed prices in supporting renewable energy
deployment and more recently purchasing incentives for electric vehicles and bans on the
sale of new combustion engine vehicles in the long term. Cross-cutting features of enabling
environments, such as currency stability of exchange rates, stability of policies and
FCCC/CP/2021/12/Add.1
27
enforcement of contracts, particularly in driving finance towards sustainable land use, and
maintenance of political will and support, have also proven to be significant drivers.
44. For adaptation finance, the role of national plans, standards and institutions takes on
more importance in driving finance flows than may be the case in mitigation finance, owing
to the importance of local, context-specific conditions. Building codes, design standards and
disaster risk management guidelines play a role in furthering climate resilience within
infrastructure and development investments. Furthermore, local and context-specific
vulnerabilities require local-level data and information systems on risks to drive investment,
particularly in agricultural adaptation activities.
45. Although climate finance flows are increasing, they remain relatively small in the
broader context of other finance flows, investment opportunities and costs. Climate
finance accounts for just a small proportion of overall finance flows, as shown in figure 3.
The level of climate finance is considerably below what would be expected in view of the
investment opportunities and needs that have been identified. However, although climate
finance flows must obviously be scaled up, it is also important to ensure the consistency of
finance flows as a whole (and of capital stock) with the long-term goals of the Paris
Agreement, specifically those set out in its Article 2.
46. Financial flows and stocks in GHG-intensive activities remain concerningly high.
Fossil fuel investments amounted globally to USD 977 billion in 2017–2018, while fossil
fuel subsidies amounted to USD 472 billion in 2018. Fossil fuel corporate capital expenditure
at risk of becoming stranded amounted to USD 50 billion in 2018, while investments with
deforestation risks amounted to USD 43.8 billion in 2017–2018, and net agriculture subsidies
amounted to USD 619 billion per year on average from 2017 to 2019. Fixed assets in sectors
linked to fossil fuel systems amounted to USD 32 trillion, real estate assets at risk in 2070
amounted to USD 35 trillion, and stranded assets worth USD 20 trillion are at risk out to
2050.
47. Given the scale and speed needed for the transformation to low GHG emission and
climate-resilient development pathways, it is critical to consider climate finance flows within
the context of broader finance flows. A sole focus on positive climate finance flows will be
insufficient to meet the overarching objectives of the Paris Agreement. This does not mean
that broader finance flows must all have explicit beneficial climate outcomes, but it does
mean that they must integrate climate risks into decision-making and avoid increasing the
likelihood of negative climate outcomes. Without this, the effectiveness of climate finance
flows can be called into question or even negated.
D. Mapping information relevant to Article 2, paragraph 1(c), of the Paris
Agreement
48. Article 2 of the Paris Agreement sets out three interlinked goals aimed at
strengthening the global response to climate change in the context of sustainable
development and efforts to eradicate poverty: (1) limiting the increase in global average
temperature to well below 2 °C above pre-industrial levels and pursuing efforts to limit the
increase to 1.5 °C above pre-industrial levels; (2) increasing the ability to adapt to and foster
resilience against the adverse impacts of climate change; and (3) in Article 2, paragraph 1(c),
making finance flows consistent with a pathway towards low greenhouse gas emissions and
climate-resilient development. Article 2 states that the Paris Agreement will be implemented
to reflect equity, and the principle of common but differentiated responsibilities and
respective capabilities, in the light of different national circumstances.
FCCC/CP/2021/12/Add.1
28
Figure 3
Global climate finance in the context of broader finance flows, opportunities and costs
49. Although there is no dedicated process for responding to the goal set out in Article 2,
paragraph 1(c), some Parties have articulated polices and measures in their long-term
strategies or domestic policy frameworks that speak to the goal. Furthermore, both public
and private sector institutions in the financial sector have articulated in their strategies efforts
to align with the Paris Agreement and the goal in Article 2, paragraph 1(c). In the absence of
a common vision among Parties on what information may be relevant, the aim of the mapping
exercise was to capture how their actions meet the goal in Article 2, paragraph 1(c), and
therefore what they consider relevant from their perspective, and it provided a number of key
insights.
50. Significant growth in relevant initiatives has been apparent since the Paris
Agreement entered into force, particularly in coalitions fostering collective
commitments on climate action. Activities relevant to Article 2, paragraph 1(c), in many
instances, are found in practices, coalitions and initiatives that predate the Paris Agreement.
FCCC/CP/2021/12/Add.1
29
Policy and regulatory measures on green finance have been recorded since 1980, although
there has been a marked increase in such measures since the adoption of the Paris Agreement
(see figure 4). This historical context is relevant as it provides evidence that even prior to
adoption of the Paris Agreement, actors were developing sustainability- and climate-related
financial instruments and regulations which represent foundations for action relevant to
Article 2, paragraph 1(c), that is also integrated with national development goals. For
example:
(a) 34 of 103 stock exchanges have sustainable bond-listing processes;
(b) Investors managing USD 90 trillion have signed on to the Principles for
Responsible Investment;
(c) 53 banks, representing over USD 37 trillion in assets, which represent one
fourth of global banking assets, have pledged to align their lending and investment portfolios
with net zero emissions by 2050, as part of the Net Zero Banking Alliance;
(d) Over 40 institutional investors with USD 6.6 trillion in assets have pledged to
align portfolios with net zero emissions by 2050, as part of the Net-Zero Asset Owner
Alliance.
Figure 4
Number of green finance policy and regulatory measures, and growth of selected initiatives since the adoption of
the Paris Agreement
51. However, the Paris Agreement triggered a focusing of action whereby existing
sustainability and climate-related finance initiatives sought to adopt objectives or activities
that matched those of the Paris Agreement goals. At least 115 sustainability- or climate-
related financial initiatives exist that claim to be either directly or indirectly associated with
contributing to the goals of the Paris Agreement. The majority relate to promoting new
financial instruments that address funding needs for sustainable development and climate
FCCC/CP/2021/12/Add.1
30
change. A smaller pool of approximately 31 initiatives are focused on greening financial
systems – for example, the TCFD, the European Union High Level Expert Group on
Sustainable Finance and the NGFS.
52. Many activities across the stakeholder mapping exercise that explicitly refer to
achieving the goals of the Paris Agreement and Article 2, paragraph 1(c), in particular are
executed through collective initiatives and organizations. This highlights the importance of
network effects, knowledge-sharing and common goal setting. In contrast, relatively few
relevant actions by national Governments are framed in the context of Article 2, paragraph
1(c). Particularly in developing countries, the ability to access international climate finance
in the context of Article 9 is mentioned, as is directing domestic finance flows towards
achieving NDC goals.
53. Assessing the real-economy impact and the risk of greenwashing remains a
challenge. Efforts relevant to Article 2, paragraph 1(c), are widespread across all actors
within the financial sector, with actions concentrated on defining their exposure to climate
risks and the economic opportunities linked to climate response measures. However,
achieving the goal in Article 2, paragraph 1(c), related to low GHG emission and climate-
resilient development, set in the context of Article 2, depends on real-economy actions that
reduce emissions in line with temperature goals and help to develop climate resilience. Many
actors in the financial sector operate at a number of steps removed from real-economy
activities, through stock or bond trading, portfolio allocations, or micro-prudential
supervision, which has little direct effect on real-economy investment decisions relative to
banks lending to projects, corporations approving capital expenditure plans or governments
announcing support incentives. Therefore, measuring the effective role of financial actors in
the context of Article 2, paragraph 1(c), is a notable topic of debate among initiatives,
including which metrics are most important as indicators of success.
54. Several researchers highlight the absence of any independent critique of the motives
and impacts of the numerous finance-related initiatives that have emerged since the adoption
of the Paris Agreement. Such critical engagement will assist in assessing the real-economy
contributions of these initiatives towards achieving consistency of finance flows and
combating greenwashing in this context. Further, a plethora of initiatives offers the potential
for incoherence and different levels of ambition in articulating how the goal in Article 2,
paragraph 1(c), may be met.
55. The most recent initiatives include efforts of respective stakeholders to align with net
zero emissions or 1.5 °C temperature rise pathways, with a focus on commitments for target
setting and reporting, in contrast to earlier initiatives that focused on advocacy and high-level
commitments.
56. Trend towards activities with more stringent minimum requirements or
mandatory regulations over voluntary activities. Actors are largely adopting approaches
in line with their institutional mandates, geographical reach and interpretation of how climate
risks and opportunities affect and benefit their operations. To date, initiatives with the widest
coverage and scope among financial actors are voluntary in nature, often with non-
prescriptive commitments to principles. More recently, some initiatives include mandatory
implementation requirements against common timelines. Furthermore, some Governments
have already signalled that mandatory exclusions or obligations are being placed on
institutions, although these remain limited in number and geographical scope.
57. More work needed to promote inclusivity and geographical representation. A
number of initiatives relevant to Article 2, paragraph 1(c), include representation from
different regions and both developed and developing countries. For private finance actors,
such representation is important, and it reveals how different relative starting points, capacity
and skills gaps exist within coalitions that make common commitments. Further, although a
significant number of initiatives were identified, many have yet to combine networks to
achieve greater effect. Of the 115 partnerships identified of relevance to supporting the goals
of the Paris Agreement, with up to 5,181 constituent members, the vast majority (75 per cent)
are connected to only one partnership.
58. Inclusive and broad geographic representation is even more critical among relevant
initiatives targeted at public finance actors, regulators and other country-focused actors such
FCCC/CP/2021/12/Add.1
31
as financial centres. In these forums, it is important to reflect the perspectives of different
regions, financial systems and country priorities in how common goals are articulated,
particularly as the activities of these actors support and facilitate the achievement of the goal
in Article 2, paragraph 1(c), as well as their country NDCs.
59. Pursuing consistency requires consideration of how finance targeted at GHG-
intensive activities can support pathways. A focus on individual financing or investment
decisions that are consistent with a pathway towards low GHG emission and climate-resilient
development is not straightforward owing to the significant potential range of what pathways
may be followed for achieving the broader goals in Article 2. The trend towards developing
climate, green or sustainable finance taxonomies, as seen across multiple public actor
initiatives, can support the identification of activities that are consistent with such pathways,
but may risk excluding necessary investment in high-emission sectors or activities that can
support the overall transition to such pathways. These may be in areas where activities that
are consistent are not yet available at scale owing to technological innovation (e.g. steel
and/or cement processes), where activities are needed to enable the transition (e.g. financing
of mining activities, road building), or where financing is needed to wind down or responsibly
manage the retiring of high-emission activities and transition communities away from their
reliance (e.g. coal phase-out policies and subsidies).
60. Transition finance taxonomies and transition bonds are being developed for private
finance actors to finance, for example, transitional activities in the context of financing just
transitions, which implies projects that meet certain conditions, such as displacing more
carbon-intensive options compared with industry norms; and enabling wider application or
integration of less-carbon-intensive options.
61. Further consideration of climate-resilient development pathways is necessary to
complement existing approaches. The mapped approaches include a strong focus on actions
linked to achieving the goal in Article 2, paragraph 1(a), of the Paris Agreement, namely
financing investments related to low GHG emissions, and to mitigating the physical and
transition-related risks of shifting from high- to low-emission development trajectories.
There appears to be limited evidence of the degree to which financial actors are aligning their
investment mandates with climate resilience goals linked to Article 2, paragraph 1(b), of the
Paris Agreement. There is a view that focusing on proper climate-related risk disclosure
should result in better, more resilient investment and financing decisions as an end in and of
itself, while other views have recognized the existing gaps in guidance and understanding on
how to proactively engage on this element.
62. Stakeholders may take action across a number of areas to support advancing
efforts in relation to the goal in Article 2, paragraph 1(c). These include:
(a) In public policy and finance, promoting opportunities to make sustainable
recovery packages consistent with the goals of the Paris Agreement in the short term and
setting in place financial policies and regulations for achieving net zero commitments in the
long term;
(b) Ensuring that just transition financing is incorporated into approaches to align
action with the goals of the Paris Agreement or into classifications of consistency with those
goals, including in supporting vulnerable developing countries at risk of climate impacts in
gaining access to capital to support their climate-resilient development, and in supporting the
shift of trade flows away from economic activities that are inconsistent with those goals;
(c) Further clarifying the differences or complementarities between climate
finance related to Article 9 of the Paris Agreement and the long-term goal under Article 2,
paragraph 1(c).
FCCC/CP/2021/12/Add.1
32
Annex II*
Executive summary of the first report on the determination
of the needs of developing country Parties related to
implementing the Convention and the Paris Agreement
[English only]
I. Introduction
1. The first NDR
1
provides an overview of qualitative and quantitative information
based on available data and evidence from reports at the national, regional and global level.
As such, the first NDR does not constitute an assessment of the needs of developing country
Parties: the numbers of reported and costed needs are higher in the reports of some countries
than of others. This does not imply that the latter have no or fewer needs; rather, this may be
due to the lack of available data, tools and capacity for determining and costing needs.
II. Context and mandate
2. COP 24 requested the SCF to prepare, every four years, an NDR for consideration by
the COP, starting at COP 26, and the CMA, starting at CMA 3. The COP also requested the
SCF to collaborate, as appropriate, with the operating entities of the Financial Mechanism,
the subsidiary and constituted bodies, multilateral and bilateral channels, and observer
organizations.
2
3. COP 25 and CMA 2 encouraged the SCF to present, to the extent possible,
disaggregated information in relation to, inter alia, mapping data availability and gaps by
sector, assessing climate finance flows and presenting information on the determination of
the needs of developing country Parties related to implementing the Convention and the Paris
Agreement.
3
COP 25 and CMA 2 also encouraged the SCF, in implementing its strategic
outreach plan, to build on existing efforts to reach out to developing country Parties and
relevant developing country stakeholders when generating data and information for the
determination of the needs of developing country Parties related to implementing the
Convention and the Paris Agreement.
4
III. Scope and approach
A. Scope
4. The first NDR presents quantitative information (hereinafter referred to as costed
needs) and qualitative information (hereinafter referred to as needs) on the needs of
developing country Parties. Quantitative information was compiled from costed needs at the
project level and those derived from economic modelling in reports at the national, regional
and global level and other sources. Qualitative information was derived from descriptions of
planned activities, strategic directions, national priorities and action plans in the same
sources.
5. To the extent possible and on the basis of the available information, the first NDR
contains an analysis and presentation of the needs of developing country Parties by time
* For a list of acronyms and abbreviations, see document
FCCC/CP/2021/10/Add.2−FCCC/PA/CMA/2021/7/Add.2.
1
Available at https://unfccc.int/documents/307595.
2
Decision 4/CP.24, paras. 13–14.
3
Decisions 11/CP.25, para. 9; and 5/CMA.2, para. 9.
4
Decisions 11/CP.25, para. 12; and 5/CMA.2, para. 12.
FCCC/CP/2021/12/Add.1
33
frame, geographical region, thematic area, means of implementation, and sector and
subsector (chap. 2). The report reflects information and data on needs as mentioned in the
national, regional and global reports. The needs are dynamically changing and may depend
on different factors, such as temperature scenarios, mitigation pathways and adaptive
capacity, extreme weather events, adverse effects of trade and economic barriers, and social
factors such as poverty.
6. Further, the first NDR illustrates processes and approaches for determining needs
(chap. 3). It also maps out available tools and methodologies for determining and prioritizing
needs, including sector-specific methodologies and tools, and advantages of and challenges
in applying them (chap. 4). Finally, the report highlights opportunities, challenges and gaps
in relation to determining needs (chap. 5).
7. The first NDR comprises an executive summary and a technical report. The executive
summary was prepared by the SCF, whereas the technical report was prepared by experts
under the guidance of the SCF but remains a product of the external experts. The technical
report has benefited from extensive inputs from Parties and stakeholders.
B. Sources of information
8. The first NDR has been compiled from reports prepared by developing country
Parties, specifically those submitted to the UNFCCC, and reports developed by regional and
global institutions. Such national reports include ACs, BURs, LEDS, NAPs, NAPAs, NCs,
NDCs, TAPs and TNAs.
9. Further sources of information are the submissions received from Parties and non-
Party stakeholders in response to the call for evidence issued by the SCF.
5
C. Approach
10. The technical work comprised a review of literature and sources of available
information and data, and quantitative and qualitative data collection and analysis,
complemented by outreach activities. Data and information were systematically collected by
the technical team under the guidance of the SCF co-facilitators for the first NDR.
11. The SCF periodically considered the outputs of the technical team and the input
derived from regional meetings, and provided guidance on the development of the first NDR,
including during conference calls and in-person meetings.
12. In preparing the first NDR, the technical team noted data inconsistencies, gaps and
interpretation challenges, as referred to in paragraph 59 below. Efforts were made to
overcome these challenges, such as identifying reporting overlaps on the basis of the
reporting guidelines and avoiding double counting in aggregating and presenting the data.
IV. Key findings
A. Overview of the needs of developing country Parties
1. Information and data from national reports
13. National reports submitted by developing country Parties as part of the UNFCCC
process contain information on their needs related to implementing the Convention and the
Paris Agreement. There are nine types of national report, which serve different purposes
under the Convention and the Paris Agreement, with reported needs varying in terms of
5
See https://unfccc.int/documents/231567. The deadline of the call for evidence was extended to 30
October 2020, by which 34 submissions had been received. All submissions are available at
https://unfccc.int/topics/climate-finance/workstreams/needs-report/repository-of-information-on-the-
needs-of-developing-country-parties.
FCCC/CP/2021/12/Add.1
34
thematic and sectoral coverage, time frame and granularity of detail. In total, 563 documents
were included in the analysis for the first NDR.
6
14. Figure 1 provides an overview of the articulation of the needs of developing country
Parties, including overall costed needs, across the nine types of national report submitted by
developing country Parties to the UNFCCC.
7
The overall costed needs by type of report are
based on the information on activities with associated costs included in the corresponding
individual national reports. The needs included in national reports are identified using a top-
down approach (i.e. needs that are typically estimated using economy-wide or sectoral
modelling techniques) or a bottom-up approach (i.e. needs that are typically identified from
a project pipeline). Developing country Parties periodically update their national reports
submitted to the UNFCCC, reflecting changing circumstances and improvements in their
data-collection processes and analysis. Therefore, data and information on needs may not be
exhaustive as the needs are dynamically changing.
Note: Ranges of costs included where available.
(a) Insights from quantitative data on needs
15. The needs identified and articulated by developing country Parties across the nine
types of national report encompass a wide range of financial, technology development and
6
Only the most recent submissions to the UNFCCC were used in the analysis as Parties regularly
update information on their needs to reflect changing circumstances. To avoid double counting where
Parties may have provided the same information in different reports (e.g. BURs and NDCs), each type
of report is treated separately, without aggregation across them.
7
Needs are catalogued in the analysis at the most granular level at which information was provided
(i.e. a project or activity expressed as a need by a developing country is counted as a single activity; if
activity-level information was not provided, needs are counted at the sector level; if sector-level
information was not provided, needs are counted at the thematic level, etc.). Depending on the nature
of the report, it is possible that the priorities and programmes consist of multiple projects and action
items. See chap. 1 of the first NDR for details on the scope of the quantitative and qualitative
information collected from national reports.
FCCC/CP/2021/12/Add.1
35
transfer, and capacity-building needs. The level of detail in the information provided varies
in terms of the description of needs and their associated costs, if specified. While some Parties
express costed needs for adaptation or mitigation purposes, other communicate needs at the
activity or sector level.
16. As at 31 May 2021, NDCs from 153 Parties included 4,274 needs, with 1,782 costed
needs identified across 78 NDCs, cumulatively amounting to USD 5.8–5.9 trillion up until
2030. Of this amount, USD 502 billion is identified as needs requiring international sources
of finance and USD 112 billion as sourced from domestic finance. For 89 per cent of the
costed needs, information was not provided on possible sources of finance. Among the
national reports, NCs from 149 Parties present the highest number (6,990) of identified needs,
of which 1,137 costed needs cumulatively amount to USD 8.8–8.9 trillion, with 5 per cent of
the costed needs distributed across 45 NCs and 95 per cent in 1 NC. BURs from 62 Parties
indicated 2,044 needs, of which 535 needs are costed, cumulatively amounting to USD 11.5
trillion, with 5 per cent distributed across 60 BURs and 95 per cent across 2 BURs, thereby
representing the highest amount of costed needs identified across the nine types of national
report. These figures should be viewed in the light of the size and nature of developing
country Parties’ economies and the scale of climate impacts.
(i) Thematic distribution of costed needs
17. As shown in table 1, cumulatively, identified costed mitigation needs tend to be larger
than costed adaptation needs across the reports that cover all thematic areas such as BURs,
NCs and NDCs. The overall amount of costed adaptation needs is comparable to the overall
amount of costed mitigation needs expressed in NCs (43 and 56–57 per cent, respectively).
In the case of NDCs, the overall identified costed mitigation and adaptation needs (50 per
cent) are comparable to the amount of costed cross-cutting needs (50 per cent), noting that
the costed needs expressed as cross-cutting are largely a reflection of one NDC. Although
some developing countries provided information on costed needs for mitigation and
adaptation by sector and subsector, this information was not provided across all reports.
Therefore, it was not possible to provide a comprehensive and accurate overall amount of
costed needs by sector and subsector in the first NDR.
Table 1
Overview of sources of reported costed needs of developing countries by type of national report
submitted to the UNFCCC
Costed needs (USD billion)
Report
Total Mitigation Adaptation Cross-cutting Other
AC
44.10 (100%) – 44.10 (100%) – –
BUR
11 465.53–11 465.90
(100%)
5 286.94–5 287.31
(46%)
3 628.81
(32%)
2 550.01
(22%) –
LEDS
1 707.15–1 707.35
(100%)
1 407.15–1 407.34
(82%)
300.00
(18%) – –
NAP
135.02–135.03
(100%) –
135.02
(100%) – –
NAPA
10.05
(100%) –
10.05
(100%) – –
NC
8 845.85–8 934.94
(100%)
5 019.30–5 033.83
(56–57%)
3 812.06–3 882.07
(43%)
2.23
(>0%)
12.25–16.81
(>0%)
NDC
5 817.48–5 888.56
(100%)
2 156.05–2 156.13
(37%)
764.24–835.24
(13–14%)
2 893.39
(49–50%)
3.81
(>0%)
TAP
40.74
(100%)
21.97
(54%)
18.76
(46%) –
0.01
(>0%)
TNA
88.24–92.33
(100%)
30.33–34.33
(34–37%)
57.9–57.98
(63–68%)
0.01
(>0%) –
Notes: (1) Ranges of costs included where available. (2) The percentages given are the percentages of the type of
costed need for each report type.
18. Although developing country Parties identified more adaptation than mitigation
needs, more costs were identified for the latter. This may not imply that mitigation needs are
FCCC/CP/2021/12/Add.1
36
greater, but rather be due to lack of available data, tools and capacity for assessing adaptation
needs (see the information on challenges and gaps in paras. 61–66 below).
19. Available information related to costed needs varies across regions (see table 2).
African countries included 1,529 needs in their NDCs, of which 874 were costed, amounting
to USD 2.5 trillion. NDCs of countries in the Asia-Pacific region included 1,677 needs, of
which 630 needs were costed, cumulatively amounting to USD 3.2–3.3 trillion. Of the 771
needs expressed in the NDCs of countries in the Latin America and Caribbean region, 166
NDCs included costed needs, cumulatively amounting to USD 168.2–168.3 billion, of which
almost 60 per cent was in one NDC. NDCs of developing countries from the Eastern
European region included 282 needs, of which 112 were costed, cumulatively amounting to
USD 9.36 billion.
(ii) Regional distribution of costed needs
Table 2
Number and cost of needs expressed in nationally determined contributions by region
Region
Number of expressed
needs
Number of expressed
needs with financial
information (i.e. costed
needs)
Costed needs based on
available financial
information
(USD billion)
African States
1 529
874
2 459.56–2
460.56
Asia
-Pacific States 1 677
630
3 180.39–3
250.39
Eastern European
States
282 112
9.36
Latin American and
Caribbean States
771 166 168.18–
168.26
Western European
and other States
15 –
–
Note: Ranges of costs included where available.
20. Some Parties reported information on potential needs related to averting, minimizing
and addressing loss and damage, either through specific adaptation activities that include
objectives related to averting, minimizing and addressing loss and damage; referenced
damage incurred owing to recent climate-related events such as droughts and severe weather;
or modelled potential future impacts of climate on GDP or economic losses in a given year
(e.g. 2030 or 2050). The information was also reported in the context of national
circumstances, climate impacts and/or needs depending on the reporting Party.
21. As noted in paragraph 5 above, needs expressed in national reports are dynamically
changing and, therefore, data and information thereon may not be exhaustive. While the
number of needs and costed needs communicated in national reports is lower for some
regions than others, this does not mean that those regions have no or fewer needs. Rather,
this may be due to lack of available data, tools and capacity for determining and costing
needs. Therefore, the number of needs and costed needs compiled from national reports
available at the time of preparation of the first NDR should not be used to draw comparisons
of the actual needs across regions.
FCCC/CP/2021/12/Add.1
37
(b) Insights from qualitative data on needs
Figure 2
Needs expressed by developing countries in national reports by theme, region and means of
implementation
FCCC/CP/2021/12/Add.1
38
Figure 3
Needs expressed by developing countries in national reports by sector
FCCC/CP/2021/12/Add.1
39
(i) Thematic distribution
22. Overall, needs related to adaptation are mentioned more often than those related to
mitigation in all report types except BURs and LEDS, indicating greater attention to
supporting developing countries’ expressed adaptation needs. For example, as shown in
figure 2, NDCs included 1,991 needs for adaptation and 1,956 for mitigation.
(ii) Regional distribution
23. When the number of expressed needs across the nine national report types is
considered, developing country Parties in the Africa and Asia-Pacific regions identified
comparable numbers of needs across the national reports with broad thematic and sectoral
coverage such as BURs, NCs and NDCs, comparable with the Latin America and Caribbean
region only in the case of BURs (see figure 2, section 2.2). Developing country Parties in the
Asia-Pacific region used NAPs and TAPs to further specify adaptation needs, as more than
half of the needs identified in NAPs and TAPs were from this region. Developing country
Parties in the Latin America and Caribbean, and Eastern European regions expressed more
needs in their NCs than in other national reports. Latin American and Caribbean Parties
expressed a considerable number of adaptation needs in adaptation-specific national reports
(e.g. ACs and NAPs) when compared with the overall number of needs expressed in their
BURs and NDCs. Developing country Parties in the African region expressed more needs
through TNAs compared with other regions, reporting 993 needs compared with the 642
needs identified by Parties in the Asia-Pacific region.
(iii) Distribution by means of implementation
24. Qualitative data show a significant prevalence of capacity-building and technology
development and transfer needs, which may in part be due to the resources developing
countries can access to support the identification of these needs. The number of capacity-
building needs is higher than finance needs and technology development and transfer needs
identified in the nine national report types except for TNAs (see figure 2, section 2.3).
Capacity-building needs expressed across the national reports typically cover areas such as
research, training and education, awareness-raising, institutional strengthening and
coordination, and policy development.
(iv) Sectoral and subsectoral distribution
25. On the basis of the number of mitigation needs expressed across the nine national
report types, energy is the lead sector for climate change mitigation actions, followed by land
use and forestry, transport, agriculture, and waste and sanitation (see figure 3, section 3.1).
26. When considering mitigation needs by sector and subsector, the nine types of national
report show that most needs in the energy sector relate to requests for support for the energy
efficiency and renewable energy subsectors, albeit with some variation between them. In
NDCs, needs for renewable energy development were identified almost twice as frequently
as those for energy efficiency (399 and 261, respectively) but the total nominal value of
energy efficiency projects was 1.5 times larger than that of renewable energy projects
(USD 377.22 billion and USD 198.08 billion, respectively). In BURs and NCs, more needs
related to renewable energy than to energy efficiency were identified. TNAs included a larger
variation among energy subsectors, including the development of natural gas, the phasing-
out of inefficient subsidies, the exploration of carbon capture and storage, and the
development of the efficient use of coal.
27. The majority of expressed mitigation needs in the land-use and forestry sector
represented a few densely forested countries, such as Bhutan, Brazil, the Congo, Costa Rica,
Ghana, Guyana, the Lao People’s Democratic Republic, Malaysia, Papua New Guinea,
Suriname, the United Republic of Tanzania and Viet Nam. This sector covers key activities
such as reforestation, forest fire prevention, social forestry development, sustainable forest
management, development of sustainable supply chains for forest commodities, spatial
planning forestry research and some land-use activities, such as management of livestock.
Data in NCs and NDCs showed that, within this sector, needs related to reforestation are the
largest needs expressed in financial terms.
28. On the basis of the number of adaptation-related needs expressed across the nine
national report types, agriculture and water are the two lead sectors for climate change
FCCC/CP/2021/12/Add.1
40
adaptation actions, followed by disaster prevention and preparedness, coastal zone
management and health (see figure 3, section 3.2).
29. Adaptation needs in the agriculture sector cover a wide variety of land uses that
overlap with other key sectors. Needs related to agroforestry and irrigation, for example, also
touch on areas or land managed under the forestry and water sectors. Needs related to the
agriculture sector relate to crop diversification, development of resistant crops, land and soil
management, livestock management, and fisheries and aquaculture.
30. Adaptation needs in the water sector are dominated by the need for water distribution
infrastructure, water harvesting and irrigation. Other types of need in this sector vary widely
and cover water resource management, water storage and water sanitation. In NDCs, about
38 per cent of expressed needs in the water sector include financial information. Water
distribution infrastructure, including wastewater treatment, was the largest need in financial
terms across all types of report.
(c) Other areas of needs
31. Developing country Parties also communicate other areas of needs that involve issues
such as gender, indigenous peoples and vulnerable groups. However, across the nine national
report types, less than 10 per cent of needed activities referred to gender or specific
communities. Where these topics are included in national reports, information tends to relate
to commitments, policies and/or strategies.
32. Some reports that expressed needs for policy development were linked to the SDGs
and the Addis Ababa Action Agenda. In general, the implementation of climate actions is
mainstreamed in SDG-related actions. However, a few reports expressed needs focusing on
institution-building and policy development, aiming to link climate commitments with the
SDGs; for example, Jordan’s need to align its intended nationally determined contribution
with the SDGs, and Morocco’s needs (expressed in its NCs) to strengthen the National
Institutional Framework of Climate Change through a regulatory system based on the
Framework Law on the National Charter for Environment and Sustainable Development.
2. Information and data from reports by regional and global actors
33. Information and data on the needs of developing countries are also available from
regional and global reports. For the mitigation needs of developing countries, these reports
use a mix of climate economic modelling for scenarios of below 2 °C, ranging from USD 2.4
trillion to USD 4.7 trillion in annual energy-related investment needs globally;
8
investment
opportunities based on stated national plans and targets including and beyond NDCs, ranging
from USD 23.8–29.4 trillion for emerging markets from 2016 to 2030;
9
and investment
estimates for achieving conditional NDC targets using carbon prices, for example USD 715
billion in Africa
10
(see figure 4 for an example of energy investment needs identified by the
International Renewable Energy Agency
11
).
8
See Collum DL, Zhou W, Bertram C, et al. 2018. Energy investment needs for fulfilling the Paris
Agreement and achieving the Sustainable Development Goals. Nature Energy. 3(7): pp.589–599.
International Energy Agency. 2020. World Energy Model Documentation. Paris: IEA. Available at
https://iea.blob.core.windows.net/assets/bc4936dc-73f1-47c3-8064-
0784ae6f85a3/WEM_Documentation_WEO2020.pdf; and International Renewable Energy Agency.
2020. Global Renewables Outlook. Energy transformation 2050. Abu Dhabi: International Renewable
Energy Agency. Available at
https://www.irena.org/publications/2020/Apr/Global-Renewables-
Outlook-2020.
9
International Finance Corporation. 2017. Climate Investment Opportunities in South Asia. An IFC
Analysis. Washington, D.C.: International Finance Corporation. Available at
https://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/climate+busine
ss/resources/final+climate+investment+opportunities+in+south+asia+-+an+ifc+analysis.
10
African Development Bank. 2021. Needs of African Countries Related to Implementing the UN
Framework Convention on Climate Change and the Paris Agreement. Available at
https://unfccc.int
/sites/default/files/resource/Needs%20Report_African%20counties_AfDB_FINAL.pdf.
11
For the purpose of the first NDR, various data sources were used to illustrate needs of developing
country Parties, without prejudice to the meaning of this term in the context of the Convention and the
Paris Agreement, including but not limited to Parties not included in Annex I to the Convention and
other classifications used in regional and global reports.
FCCC/CP/2021/12/Add.1
41
Figure 4
Shares of annual average clean energy investments in the International Renewable Energy Agency
transforming energy scenario, by region, 2016–2050
Source: International Renewable Energy Agency. 2019. Transforming the energy system – and holding the line on
rising global temperatures. Abu Dhabi: International Renewable Energy Agency. Available at
www.irena.org/publications/2019/Sep/Transforming-the-energy-system
.
34. Reports based on energy–economy models note that developing country regions have
the largest investment gaps compared with historical trends to achieving climate scenarios in
line with the Paris Agreement. Three to fourfold increases of investment are necessary in
both renewable energy and energy efficiency across many regions that include developing
countries.
35. Regional and global reports also provide estimates related to adaptation and resilience.
Costs based on bottom-up national and sector-based studies (ranging from USD 140 billion
to USD 300 billion annually by 2030) measuring impacts to GDP (for example, ranging from
USD 289.2 billion to USD 440.5 billion up to 2030 in Africa) and the incremental investment
needed to upgrade or retrofit infrastructure stock (ranging from USD 11 billion to USD 670
billion in annual incremental costs) are most prevalent.
36. To make current and future infrastructure climate-resilient, annual costs as a
percentage of GDP are at least double in countries with emerging market economies, low-
income countries and small States compared with the costs in high-income countries, that is
1.1–1.49 per cent compared with 0.45 per cent. Investment needs expressed as a percentage
of GDP for upgrading new infrastructure and coastal protection are proportionally greater in
lower-income countries and small States, while retrofitting existing infrastructure is the
major cost component in countries with emerging market economies. However, the reports
also noted that specific knowledge on the degree of exposure of infrastructure to natural
hazards, related to their location, intensity and level of risk, could affect the incremental cost
of making infrastructure climate-resilient (e.g. 3 per cent of total investment as opposed to
8–45 per cent) (see figure 5).
12
12
As footnote 11 above.
FCCC/CP/2021/12/Add.1
42
Figure 5
Public investment needs for resilience of physical infrastructure, by country grouping
(gross domestic product weighted average)
Source: International Monetary Fund. 2020. Fiscal Monitor. Policies for the Recovery. Washington,
D.C.: International Monetary Fund.
37. The information and data generated from the national, regional and global reports
cannot be compared with each other as the reports have different time frames, objectives and
scopes. However, all of the reports may be viewed as complementary in offering different
insights, granularity and processes and approaches for identifying needs.
B. Processes and approaches for determination of needs of developing
country Parties
1. National institutional arrangements
38. Developing country Parties have varied institutional arrangements for identifying
climate change needs, which are described in most of their national reports submitted to the
UNFCCC. Most countries have established specialized institutions within their ministries
and departments whose mandate is to spearhead climate change actions. These institutions
have various names such as climate change directorate, climate change unit, interministerial
climate change coordination committee, climate change technical working group and climate
research centre.
39. Good practice in ensuring buy-in and effective coordination of the needs identification
process is the engagement of high-level decision-making government offices at the initial
stage of the climate change needs identification process. In addition, the engagement of other
stakeholders and the assignment of specific roles and responsibilities to participants
representing various sectors and interest groups at both the national and subnational level
was noted in the reports of the majority of developing countries.
40. Institutional arrangements for needs determination vary widely across countries.
However, in most countries the ministry responsible for environmental affairs coordinates
the process through a focal point or a committee.
41. The focal point leads the needs identification process and can adopt varying
arrangements for stakeholder consultation. The stakeholder consultation process leads to
determining the institutional arrangements for the needs identification process. Some of the
most common institutional arrangements include focal point only, focal point with other
ministries and an interministerial committee. Among these, the interministerial committee is
the most inclusive and likely to provide more detailed information on needs across sectors.
2. Needs identification process
42. The needs identification process of most countries starts with consultations between
the lead ministry and the country’s leadership. This ensures country ownership and top-level
support in the needs identification process (see figure 6).
FCCC/CP/2021/12/Add.1
43
Figure 6
Common steps adopted by countries’ committees or units for identifying climate change needs
43. Stakeholder consultations are an integral part of the needs identification process.
During the initial phase, background information is collected and assessments are carried out
to help scope the needs. The stakeholders consulted are mainly from government line
ministries, though in some instances they include non-governmental organizations and the
private sector. Local communities are the least consulted stakeholders during the process.
44. In most of the national reports, the description of the needs identification process does
not explicitly mention inclusivity aspects. Needs related to gender and local communities are
captured in some reports emanating from those processes. However, where the needs
identification process has projects and programmes as part of its output, gender and other
inclusivity aspects of various stakeholders were mostly elaborated in the project or
programme documents.
3. Processes and approaches used by other actors, namely multilateral climate funds,
multilateral development banks and United Nations agencies
45. MDBs and United Nations agencies play a critical role in supporting developing
countries in their needs identification process. In most cases, these agencies use experts
during country-driven needs identification consultation forums to provide insights and share
data that may help developing countries better identify and report their needs.
46. In other instances, MDBs and United Nations agencies provide financial and technical
support for developing countries in the needs identification process. This support is used to
carry out in-depth sectoral analysis to identify pathways within these sectors where
considerable effort is needed and where greater impacts can be achieved. For countries that
have benefited from this support for their second NDCs, their reports provide more granular
information on needs, including by sector, compared with their first NDCs.
47. The multilateral climate funds established under the Convention, namely the GEF,
including the special climate funds managed by the GEF (the Special Climate Change Fund
and the Least Developed Countries Fund), the Green Climate Fund and the Adaptation Fund,
also play a critical role in providing financial support for countries in facilitating their climate
change needs identification process. This is particularly evident in the case of the Green
Climate Fund and Adaptation Fund readiness support and the GEF Capacity-building
Initiative for Transparency Trust Fund, which enable countries to identify and prioritize their
climate change needs.
C. Methodologies and underlying assumptions used in determining the
needs of developing country Parties
1. Methodologies used at the national level by developing countries in national reports
48. Developing country Parties identify adaptation and mitigation needs in preparing their
national reports, following UNFCCC reporting guidelines and guidance and, in some cases,
other methodologies adapted to their national context. The approaches taken vary depending
on institutional and human capacities, cost, geography, time frame and data availability.
FCCC/CP/2021/12/Add.1
44
49. Although recent national reports include more information about methodologies used
to determine adaptation needs, overall, there is still more information about the
methodologies used to determine mitigation needs than for adaptation needs. The types of
methodology applied vary. Most methodologies used to identify mitigation needs are
quantitative, while a lower number of qualitative methodologies are used to identify
adaptation needs. However, in recent reports, some countries have used methodologies to
identify both mitigation and adaptation needs.
50. Countries in the Africa, Asia-Pacific, and Latin America and Caribbean regions
present region-level information about methodologies applied to determine mitigation needs.
Countries in the Africa and Asia-Pacific regions also present information about
methodologies used to determine adaptation needs.
51. UNFCCC reporting guidelines and guidance, such as those provided for TNA
preparation, have facilitated identification of needs for technology transfer and capacity-
building related to mitigation and adaptation actions through methodologies such as the TNA
methodology and the guidance for preparing a TAP.
13
However, the existing reporting
guidelines and guidance do not include specific provisions on how to assess these needs at
the local level. As such, countries assess their needs on the basis of methodologies developed
for application at the national or international level.
52. Methodologies used by developing countries to determine mitigation needs include
both top-down and bottom-up models for the energy and non-energy sectors. Bottom-up
models are suited for studying options that have specific sectoral and technological
implications. Top-down models are useful for studying broad macroeconomic and fiscal
policies for mitigation, such as carbon or other environmental taxes. Methodologies applied
to identify mitigation needs mainly focus on the cross-cutting, energy, greenhouse gas
inventory preparation, waste, transport, agriculture, forestry, building and industry sectors.
53. Methodologies used by developing countries to determine adaptation needs mostly
include vulnerability assessments that determine the levels of risk and vulnerability for each
sector. These methodologies mainly focus on the agriculture, ecosystem and biodiversity,
water and cross-cutting sectors.
2. Methodologies used at the regional and global level
54. For international and regional reports, top-down methodologies have been developed
and applied to identify finance, technology development and transfer, and capacity-building
needs. Such reports have provided alternative methodologies to developing countries that
have been adapted to national circumstances and contexts and used to determine national
needs.
D. Challenges, opportunities and gaps in determining the needs of
developing country Parties
1. Opportunities
55. There are several regional and global specialized institutions that can support
countries in their needs identification process by providing expertise and data. Some of these
institutions are United Nations agencies, to which countries have quick and easy access and
which can be engaged with during the needs identification process to provide the required
support.
56. A number of platforms have been established by various institutions, including United
Nations agencies and MDBs. These platforms offer a good opportunity for developing
countries to share their experience and good practices in the needs identification process.
Most developing countries are already using these platforms to share their experience.
57. Several initiatives have been established that can help in the needs identification
process. These initiatives include the establishment of emissions inventories, which provide
some of the data and information that can facilitate the prioritization of sectors and activities
as part of the country’s climate change needs identification process.
13
Technology Executive Committee. 2020. Enhancing implementation of the results of technology
needs assessments. Bonn: UNFCCC. Available at https://unfccc.int/ttclear/tec/brief13.html
.
FCCC/CP/2021/12/Add.1
45
2. Challenges
(a) Challenges experienced in the preparation of the report
58. In compiling the needs of developing country Parties from the various sources, efforts
were made by the technical team to overcome challenges such as identifying reporting
overlaps so as to avoid double counting in aggregating and presenting the data.
59. Nevertheless, the following challenges were encountered in collecting, categorizing,
aggregating and presenting the data on needs:
(a) Data inconsistencies: the classification of sectors and subsectors is not
uniform across data sources, including in different sources of information and reports
submitted by the same Party. This increases the risk of double counting, as cost estimates
may be given in one report by sector and in another report by activity, so the same activity
may be captured and hence accounted for under the costs by sector. Issues related to the
definitions of needs also introduce inconsistencies because needs are referred to as qualitative
needs, investment needs or costs;
(b) Data gaps: gaps in the coverage of information on costed needs by sector or
subsector pose a significant challenge. These gaps are particularly evident for adaptation
needs, which, compared with cost estimates for mitigation, remain limited. Significant data
gaps related to capacity-building needs remain; these are predominantly characterized in
qualitative terms. Further, information on methodologies used in producing and
communicating information on needs in national reports is, in many cases, not included in
the reports. In addition, methodological assumptions, which in most cases are not stated, may
impact the interpretation of the data. The needs are dynamically changing and may depend
on different factors such as temperature scenarios, mitigation pathways and adaptive
capacity, extreme weather events, adverse effects of trade and economic barriers, and social
factors such as poverty. Most reports, however, provide a snapshot of a Party’s needs. It
should also be noted that not all Parties have submitted reports;
(c) Data interpretation: when collecting, analysing and aggregating data and
information on the needs of developing country Parties, best efforts have been made to ensure
accuracy. When collecting and analysing the amounts of needs reported by developing
country Parties in their national reports, different Parties apply their respective definitions
and interpretations of needs. Needs may be reported as needs or activities needed to take
climate action. Furthermore, costed needs may be determined in one national report but not
in the subsequent report, without stating whether the same amounts of costed needs apply.
60. The following steps were undertaken to analyse, aggregate and present the data:
(a) Analysis of data gaps and identification of areas for improvement;
(b) Harmonization of data sets used for estimating the global total needs in order
to minimize misalignment between information and data according to thematic areas,
regions, sectors and time frames;
(c) Presentation of quantified data in ranges of estimates where possible, instead
of aggregating the amounts, to avoid possible data overlaps;
(d) Use of case studies to highlight good practices and lessons learned in
determining needs.
(b) Challenges experienced by developing countries
61. Institutional coordination was highlighted as a major challenge in the needs
determination process. The coordination challenge affected needs identification between
sectors and between levels of governance, namely the local and national level. Two of the
identified drivers of limited coordination were the lack of specialized institutions within
ministries with the mandate to spearhead climate change actions, and the involvement of
ministries other than the environment ministry in climate change planning in the needs
identification process.
62. While most countries have used methodologies to identify and report their needs both
qualitatively and quantitatively, costing these needs has been a major challenge and therefore
most of these needs do not have accompanying cost estimates. This challenge is particularly
FCCC/CP/2021/12/Add.1
46
evident in deriving cost estimates for climate adaptation and enhancing resilience needs, and,
in this context, deriving cost estimates for averting, minimizing and addressing loss and
damage needs, since developing countries’ adaptation actions cannot always be included in
short-term projects, but rather require long-term interventions that are difficult to estimate in
monetary terms.
3. Gaps
63. Developing countries have taken significant steps to improve their needs
determination process but capacity gaps within lead institutions continue to hinder progress.
These capacity gaps vary widely across countries and include the lack of qualified personnel
to spearhead the needs identification process and the lack of institutional-level capacity.
64. Limited availability of granular data at the sector and subsector level constitutes one
of the major gaps identified by developing countries. As a result, many developing countries
provide cost estimates for overall needs rather than disaggregated by theme or sector.
65. The lack of specialized national institutions to spearhead the means of implementation
under the Convention, such as technology development and transfer, and capacity-building,
limits the ability of some developing countries to track needs continuously and identify
additional and emerging needs.
66. Limited detailed guidance on the structure and content of reports submitted to the
UNFCCC resulted in needs with varying levels of detail across countries. Where such
guidance was available, for instance for TNAs, the needs were identified at a higher level of
detail compared with needs communicated in other national reports.
4. Insights into determining needs using available resources: country case studies and
experience
67. Country case studies have shown that the needs identification process provides an
opportunity for countries to translate their needs into investment opportunities and climate
actions, including by using existing support mechanisms to prioritize and cost identified
needs and turn needs into project ideas for support. For example, through the TNA process,
some countries identified technology support needs and submitted a request for technology
assistance to formulate project ideas related to technology development and transfer.
68. Costing adaptation and mitigation needs for action is becoming a crucial area of work
at the national level in order to better identify gaps where financial support is needed and
ways to leverage public and private resources.
5. Co-benefits related to addressing the needs of developing country Parties, such as in
relation to the Sustainable Development Goals, disaster risk reduction and the Addis
Ababa Action Agenda
69. For most countries, climate change needs are aligned with the targets set out in the
2030 Agenda for Sustainable Development. As the SDGs are ideally indivisible, all
developing country Parties covered in this report are taking action to address SDG 13 that
relates to taking action to address climate change, and SDG 13 affects all the other SDGs.
Overall, the needs identified by developing countries touch on all SDGs, with 75 per cent of
NDCs having linkages to SDGs 2, 6, 7, 8, 9, 11, 12, 13, 15 and 17.
70. In their national reports, some developing country Parties refer to the Addis Ababa
Action Agenda provision for mobilizing and aligning local resources for climate action. This
is particularly evident in countries that capture their climate action budgets under the national
budgeting process.
V. Recommendations
71. The SCF invites the COP and the CMA to consider the following recommendations:
(a) Encourage developing country Parties and climate finance providers, as well
as multilateral and financial institutions, private finance data providers and other relevant
institutions, to enhance the availability of granular, country-level data on needs related to the
implementation of the Convention and the Paris Agreement with a view to addressing
existing data gaps;
FCCC/CP/2021/12/Add.1
47
(b) Encourage developing country Parties to share best practices on determining
needs, including regarding the institutional capacity conducive to determining needs;
(c) Encourage developing country Parties to provide, where possible, information
on needs related to:
(i) Gender-responsive climate action and the needs of indigenous peoples and
vulnerable groups;
(ii) Preparation of national reports to the UNFCCC, including reporting on the
activities contained therein;
(iii) Addressing and mitigating risks, including physical and transitional risks;
(iv) Energy poverty as it relates to sustainable development;
(v) Methodologies employed in the determination of the needs in their national
reports to the UNFCCC, including, in accordance with reporting guidelines and where
available, quantified data on needs;
(d) Request the SCF, in preparing future NDRs, to present available data and
information on needs related to the recommendations referred to in paragraph 71(c) above;
(e) Invite the operating entities of the Financial Mechanism, United Nations
agencies, multilateral and bilateral financial institutions and other relevant institutions to
make use of the information contained in the first NDR when supporting developing country
Parties in identifying and costing needs;
(f) Invite the operating entities of the Financial Mechanism to revise templates
and guidance for developing countries when supporting their processes in identifying their
needs with a view to enhancing availability of granular information on qualitative and
quantitative needs;
(g) Encourage the operating entities of the Financial Mechanism, United Nations
agencies, multilateral and bilateral financial institutions and other relevant institutions to
make available further information on methodologies related to determining and costing
needs, especially for adaptation needs and incremental costs;
(h) Encourage developing country Parties to consider the insights on
methodologies identified in the first NDR when costing and determining needs;
(i) Encourage developing country Parties to take advantage of available resources
through the operating entities of the Financial Mechanism, as well as other multilateral and
bilateral actors, to strengthen institutional capacity for identifying and costing their needs in
relation to implementing the Convention and the Paris Agreement;
(j) Request the SCF to engage with public and private financial institutions and to
disseminate the findings of the first NDR;
(k) Invite UNFCCC constituted bodies, in particular the Paris Committee on
Capacity-building and the Adaptation Committee, to consider the insights identified in the
first NDR when implementing their respective workplans;
(l) Encourage Parties, multilateral and financial institutions, academia,
methodology developers, research institutions and other relevant actors to continue to
develop methodologies for the determination of adaptation and resilience enhancement needs
and, in this context, needs related to averting, minimizing and addressing loss and damage;
(m) Encourage the operating entities of the Financial Mechanism, United Nations
agencies, multilateral and bilateral financial institutions and other relevant institutions to
provide financial and technical support to developing countries for updating the reporting of
their qualitative and quantitative information and data on needs to be considered in
subsequent NDRs, as appropriate;
(n) Encourage all actors, when determining needs for implementing the
Convention and the Paris Agreement, to highlight linkages to the implementation of the 2030
Agenda for Sustainable Development and application of the Addis Ababa Action Agenda.
12
th
plenary meeting
13 November 2021
